If you're having trouble making your monthly student loan payments, relief is possible. If your loan servicer is NelNet, one of the companies contracted by the federal government to handle student loan payments, there are three specific ways to lower your payments, including:
Let's explore the options...
One way you can lower your payments through NelNet is by enrolling in an income-driven repayment plan. There are four such plans, and each one adjusts your monthly payment based on your income (between 10% and 20% of your discretionary income) while increasing your loan term to 20 or 25 years.
This makes your payments more manageable when you're not earning a high salary. As a bonus, after your loan term ends, any remaining loan balance will be forgiven — although you will have to pay taxes on the forgiven amount.
Another option is to consolidate multiple federal loans through a Direct Consolidation Loan. When you do this, you'll merge multiple eligible loans into a single, easy, payment.
Direct Consolidation Loans are also eligible for income-driven repayment plans and loan forgiveness after 20 or 25 years.
However, be aware that if you extend the term of your loans to get a lower monthly payment, you'll likely pay more interest over time. Another thing to note is that your consolidated interest rate (the average rate of all your individual federal loans) may be slightly higher than some of the original loans. It's calculated by taking the weighted average interest rates of all of your loans, and rounding up one-eighth percent.
You should also be aware that if you consolidate your loans, you'll reset the clock for Public Service Loan Forgiveness, if that's a program you're eligible for.
Because Direct Consolidation Loans are offered by the U.S. Department of Education, your loan will continue to be serviced your through NelNet. You can learn more about consolidation at NelNet.com and apply at StudentLoans.gov.
Another way to lower your monthly student loan payments is to refinance through a private lender. Refinancing can score you a lower interest rate and lower your monthly payment.
You can refinance both federal and private loans with a private lender. However, bear in mind that if you refinance federal loans, you'll lose access to perks such as income-driven repayment and Public Service Loan Forgiveness.
Here's how it can work for you: Let's say you currently pay $500 a month on a $50,000 loan. If you have a good credit score and refinance at a 5.69% fixed interest rate, you can lower your monthly payment to $349 a month.
Check our Student Loan Refinancing Calculator to find out how much you could save.
Whichever path you end up taking, the first step is reaching out to NelNet. If your account is past due or you can't make make an upcoming payment, don't be afraid to call them. As your service provider, they're here to help. Learn more about the role of a service provider on the blog.
Works with 275+ not-for-profit community lenders for higher approval chances
LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.
Offers unemployment protection and career/coaching/networking
SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.
For every loan they fund, they contribute to the education of a child in need
CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.
Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.
Get a personalized review of your refinancing options with CommonBond today.
Earnest empowers people with the financial captial they need to live better lives.
Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.
Click here to apply with Earnest and to see how much you can save.
Operates in all 50 states; 2nd largest student loan refinancing lender
Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.
Special offers for medical resident and fellow refinance products
Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.
Click here to see more of Splash's offerings and to see how you can save money.